Sexually Transmitted Debt: Eewww!

You can contract more than just disease by sleeping with the wrong person…watch out for sexually transmitted debt, which can creep into your sex life while you remain blissfully unaware. Your doctor won’t pick up on it; there is no blood test for this one. Your bank book and credit score though: they will bear the brunt of this contagious and insidious plague.

Scott & Sheila had a fiery and tumultuous relationship – one they both loved and hated. Communication was not one of their strengths, and they had very different relationships with money and respective financial backgrounds. Bank accounts aside, they shared many things, including Scott’s credit card, Scott’s credit rating, and Scott’s cash. Sheila never had any of the above, so when it came time to buy a car, a big tv, and any other assortment of elaborate toys at her beckon, Scott was the one to pony up the cash.

Of course, because they were a couple, it didn’t matter that it was Scott’s credit card and Scott’s car loan. They would both pay everything off together, and ride off into the sunset hand in hand. Right?

(….crickets chirping….)

Sadly, no. They broke up shortly after the last round of purchases, and Sheila managed to kick Scott out, rendering him homeless, with no cash (she drained their bank account), and nothing more than the clothes on his back, a new car loan, and an over-the-limit credit card. Sheila even (initially) kept the car. No matter anyway – Scott couldn’t even afford to put gas in it.

Making no judgment as to what happened behind closed doors to warrant the breakup, Scott was irrefutably the victim of sexually transmitted debt: a virus that took him many years to overcome, and one that he even inadvertently passed on to his next relationship before finally kicking.

Although the scenario above happened with relative innocence, there are people out there who are in the business of sexually transmitted debt. Elderly people or those with disabilities are prime targets. The veil of an initially fulfilling relationship can be lifted to reveal blatant abuse and use of one person’s financial stability for the other’s gain.

Regardless of whether there are honorable intentions or not, there are some ways we all can protect ourselves against sexually transmitted debt:

Avoid Joint Banking

To be an official couple, you don’t need to do your banking together. In fact many married couples get by just fine with mortgages and kids in tow without ever signing on the dotted line together.

If it is easier to have a joint account to pay for household expenses, then simply deposit the minimum amount of money into that account necessary to cover the bills, and enjoy your personal account for the rest. It doesn’t have to be a demonstration of a lack of trust; in fact managing finances separately can allow for one spouse to surprise another with a gift, and also for each spouse to maintain a degree of fiscal responsibility –an empowering and necessary skill at every stage of life.

Don’t Sign as a Guarantor

If you don’t want to see your partner’s debt become your own, then don’t become a guarantor! When you guarantee a loan, you are actually guaranteeing the bank that if the loan recipient can’t or won’t repay the loan, you will. Sure, your employment history or income may look better for qualification purposes, but unless you are prepared to take on the debt as your own, don’t do it.

Here are a few questions to ask yourself if you have been requested as a guarantor:

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Can I afford to make the payments if my partner can’t or won’t?

How will our relationship be affected if I am suddenly on the hook for the loan?

Would paying out the loan render me bankrupt or put me in financial duress?

If it is a business loan, do I truly understand the business and its finances?

Can the borrower increase the loan amount without my knowledge?

Am I being pressured at all into making this decision?

Co-Borrow at your own Risk

Similar to signing on as a guarantor, your personal financial history might bode well for co-signing a loan with your partner. This will be inevitable if you end up getting a house or car together, but you can add protective measures by ensuring that both spouses need to sign to redraw or increase the loan amount. Generally speaking, only co-sign a loan for an item you both can derive enjoyment from.

Joint Credit Cards = Joint Debt Traps

I had numerous clients who hid debt from one another all the time. Hubby and wife (very solid couples in some cases, I might add) had joint credit cards, but only one person opened the mail. That same person also managed to run up the cards to beyond their limits with impulse shopping purchases. If you have a subsidiary card issued for your credit account, you – and only you - are completely liable for the outstanding amount if your partner goes awol.

Discussing finances openly is difficult for many, if not most couples. And I must note that married and common-law couples (depending on where you live) often have legislation in place that prevents one spouse from escaping the relationship with all the assets while the other bears the brunt of all the debt. But even marriages can dissolve with a few nasty surprises: I have a friend who had no idea that her ex was spending all their money on booze, and many years (and legal battles) later she is still paying off tens of thousands of dollars of their “shared” debt.

Knowing this, how do we avoid all sexually transmitted debt and in so doing not shed trust from our vocabulary or decide to be single for the rest of our lives? Simply put, there is no way to cover off all the bases. One of the keys to a relationship is trust. Love is blinding, but keeping your eyes open and refusing to co-sign a loan might be wrongly construed as a lack of trust. It is a sticky web to navigate, and the only truly effective way to make it through is by talking everything through – even if the initial conversation is painful. If the relationship is to be fruitful – emotionally and fiscally – then both parties have to come to the table with their cards visible, and trust that they’re playing the same game.

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I know it's a dirty word to most folks, but prenups are not just for the rich. Why? Because imagine if Scott and Sheila had gotten married and Sheila had run up a separate -- not joint -- credit card after they got hitched that Scott didn't know about. Then, years after their divorce when Sheila stops paying on her credit card because she's flat broke -- and because Scott managed to scrape a little money together since their split -- suddenly her credit card company comes after him for her credit card debt! According to Suze Orman, this happens all the time. For more reasons to get a prenup, see "Who Needs Prenups?" at http://shanelyang.com/2008/07/11/who-needs-prenups/

Okay...this post made me really sad. I can see why, in some situations, you might not want to share bank accounts with your spouse (history of debt, history of really poor financial management, etc). However, I've found that sharing an account with my husband has been overall a great thing. We have strengths in different areas of financial management (He's a smart investor, I'm good at managing the day-to-day expenses), and it's really been beneficial to have discussions about money.

I have a relationship with my husband based on openness, trust, and respect, and we've worked hard to get it that way. We went through over a year of counseling before we got married- believe me, there were no surprises when we tied the knot.

Do I think people should instantly merge finances with their latest significant others? Absolutely not. But don't discount the positive relational benefits that real discussions about shared money can bring.

You have nothing to apologize for by merging your finances with your husband's. But you are married, and the rules are different for you than for unmarried couples. You have made a formal committment to each other, and that makes a difference. When people try to live and act like they're married whey they aren't it always leads to trouble. I'm a financial planner by training myself and in my opinion, married couples should share EVERYTHING financially and have joint accounts whenever possible. The only exceptions should be retirement accounts (that can't be titled jointly) and mortgages, when one spouse's credit history would prevent approval.

My husband and I share the bank account where the bulk of our money is, but we have some other structures that help us:

1. We each have a separate account for our own allowance, which we can spend as we see fit.
2. Any purchase over $100 must be discussed. Even if it is with your own money. This helps put a stop to crap piling up.
3. We plan our savings goals.
4. We have joint and separate credit cards. Joint for group purchases, personal for personal.

A couple caveats: we are both engineers and we make about the same amount of money. This means there is a lot of logical reasoning about our money and little desire to hide purchases since we both have the same amount of money to work with.

I couldn't disagree more that married couples ought to keep separate accounts. Part of being married, the main part, is that two individuals become one flesh. If you can't trust your spouse with your finances, why on earth did you marry them in the first place?

My husband and I don't have separate money. After the wedding, we immediately opened joint accounts and have been working on that basis for the past 20 years very successfully. I'm not saying we don't have conflict over funds - of course we do, but neither of us has ever used the phrase 'it's my money' because it's not his money or my money. It's our money. When one of us screws up, as we do because we're human, we work it out together, just as we would work out any mistakes we made in other areas.

Of course people shouldn't be comingling funds or credit with boyfriends and girlfriends - there is no legal protection in most of those situations, but marriage conveys legal obligations and should be viewed as a lifelong commitment, different from living with someone. I think it's sad that we've come to a place in this society where marriage and what used to be called 'shacking up' are treated as equivalents.

My ex and I drifted into the separate finances thing organically by getting married after living together for several years of using our own separate accounts. It was lack of communication and failure to have shared money goals that ultimately killed the marriage, and the separate account setup that you describe served to facilitate that situation.

Sure, a "real together" couple could make it work, but I can count those types of couples I know on one hand. Given that these arrangements are frequently negotiated by the young and inexperienced I'd strongly suggest to anyone who has the chance to choose or change their joint financial situation to take the advice of the above poster and combine finances. You can always give each other an allowance that can be used for whatever you like, but otherwise your joint finances need to be completely transparent. Each partner needs to be part of the budgeting and bill paying process. This forces communication about money and goal setting. Separate accounts tend to facilitate separate lives, not strong marriages.

Also, it may be that credit companies can't come after someone who isn't specifically listed on an account, but debt acquired by either party during the marriage in the state I live in (and I would wager that most states are the same) does "belong" equally to both partners when dividing assets and debts during a divorce or dissolution.

In other words, if one partner goes wild with the credit card spending during the marriage without the other partner knowing about it, the innocent partner may still be burdened with half of that debt by the court during the divorce proceedings. Instead of directly paying it back to the credit card company, they may just lose that amount of assets to the other partner.

Funny how a divorce completely changes your views on marriage and money! :-)

Assumes that the two people earn the same - with kids in tow, even. We made decisions about how we wanted our children to be raised that affected both of our respective salaries and earning power. Because I chose to be the one to give up more, professionally, should I be punished because my earnings are less and have no say over the money? Our marriage is a LOT more than money and giving money that much power (ie - something that has to be measured individually and kept separate above all else) doesn't fit in with our whole-istic view of our partnership. Might as well assign us one kid each. "Hey, our son looks more like you honey, so I'll leave him for you, and I'll take care of our daughter." Or maybe divide the house up room by room....

The thinking of separate but equal is totally outdated. There are situations where it may be appropriate but as a blanket statement for any couple it just does not fit.

Our marriage is a partnership and we work as partners in everything, even money.

As for the first part of the article though, that I totally am on board with. There is no requirement for every relationship you have to merge finances.

My partner and I moved in together about six months ago. She had left a bad relationship, and this is the first truly serious relationship I'd ever had.

She lost her job right after we moved in together, leaving me with her bills, mine, and the responsibilities of just having bought a new home. We made an agreement that she would take care of my son while she looked for a new job and save ourselves the cost of daycare. That snowballed into her babysitting other kids in our home. Overall, this works for us, but the loss of a second income meant mine was stretched more and more. We merged our bank accounts against my better judgement. She wanted to do this because I kept overdrawing my account, trying to pay for everything.

She and I come from very different backgrounds as far as money. I grew up middle class, and she was very poor. So now that we have a joint account, she makes me feel guilty for every little purchase. She receives state aid because she makes under the poverty level, and she gets upset if I go grocery shopping without using her food stamp card, even though I can afford it.

I just got a large raise at work, and I'm considering siphoning the extra money off to a savings account. My partner doesn't see the benefit of saving, other than for a vacation, but I like to have "emergency money" and money to put in my IRA. She actually got upset with me when I wanted to put my son's child support funds into his 529 account.

I've tried discussing this with her, and she continues to act as though we are drowning and never going to get out of the hole, even though I've been paying off debts. She plans lavish weekends for us, and then wonders where our money goes.

Personally, I think all couples should have a 3 pot system. A joint account for household expenses, and separate accounts for each person to be spent as they want. It avoids the guilt over spending "our" money.

Unfortunately, my partner can no longer get a checking account, so this system doesn't work for me. And I find I've inherited a lot of debt that I'm going to be paying for in addition to my own. Finances should definitely be discussed long before making committments to one another.

"I've tried discussing this with her, and she continues to act as though we are drowning and never going to get out of the hole, even though I've been paying off debts. She plans lavish weekends for us, and then wonders where our money goes. ...
Unfortunately, my partner can no longer get a checking account, so this system doesn't work for me. And I find I've inherited a lot of debt that I'm going to be paying for in addition to my own. Finances should definitely be discussed long before making committments to one another.

There is no such thing as an "unbreakable commitment" in human affairs.

As far as I can tell, you have made no unbreakable commitments to one another, and in fact are not even married. And, in terms of partnership, your financial partnership is one that is unclear to both parties if you have such different expectations about money.

If so, you have no legal obligation to your "partner"'s debt, even if you feel you have an emotional or personal obligation at the moment.
Sounds to me like there is a big part of you wanting to reassess this relationship, and another part that won't or is unable to--perhaps because of inherited "programming".

I would say that it is not too lateto find out if your and your partner's goals are in line with one another, and if they are close enough, work towards resolving the differences in your understanding about money. If they are not, you might want to start thinking about whether it makes sense to spend any more time in your relationship with this person.

In fact, you haven't said you are married, and if not you have not inherited any debts. Don't get married to this person unless you can work out these issues to *your* satisfaction.

Pam #14

I have been with my husband 37 years married 31 years and we have always had our money seperate.We always have the option of "pooling" " joint payments" "treat" but from the time we started dating to living together to married, thru buying cars/houses/paying for college or a wedding we negotiated the financial aspects.I think the best system is one you both come to agree on whether it is 3 pots or joint or seperate etc.there is nothing sexy about debt, betrayl,hurt feelings etc.

It always amazes me how people want to take an eminently practical matter like the mechanics of personal finance and make it emblematic of things like trust and commitment.

1. Sad Guest, becoming "one in the flesh" is symbolic. As a practical matter, you can't eat while your husband doesn't and expect him to survive. Personal finance is practical as well, and your assumption that having separate accounts points to a lack of trust says more about your relationship than anyone else's.

2. Sad Guest Too, if you have to "force discussion about money and goal-setting," sorry, your relationship's already doomed, separate accounts or not.

3. LizMendoza, I'm not clear why you need a joint account to discuss money. In addition to separate bank accounts, my wife and I are both professionals with separate 401K's. We go over our statements and discuss our strategies when it's time to rebalance, and if one of us has done really well, maybe the other will adopt that approach. Money is a casual and frequent topic of conversation as it should be in a healthy marriage regardless of the account structure.

In the case of marriage, it's generally "community property" anyway, so use whatever works: joint, separate or both. But recognize that it's a practical decision, because once you make it a symbolic statement about your marriage, it's much harder to make sound financial decisions.

Once more thing: diversity in personal finance as in investing can help reduce risk. Recently as WAMU started to go under and real questions about depositor rights loomed, our anxiety was reduced by having ~50% of our liquid funds stored in another (stronger) institution. It's seldom a good idea to keep all your money in one location whether a coffee can or a bank.

Nora, this is the best article relating to any topic of finance that I've read in a long, long time. I commend you for addressing this subject; it's a very timely issue. You need to see about getting this published elsewhere. This should be on the MSN homepage, in my opinion. Investopedia.com would readily pay you to publish this. If you don't want to submit this article yourself, can I have your permission to write one of my own on this issue and use your article as a source?

It doesn't matter if we have joint accounts.
It doesn't matter if we have separate accounts.
It doesn't matter if it's his, mine, or ours.
It doesn't matter if we split everything 50/50 or 60/40 or throw it all in a pot or bury it in the backyard.
None of that matters.

The only thing that matters when handling finances between two people is that they work together.

I wish people would stop fighting about this topic like the other side is trying to insult their marriage. It's a personal choice which way you swing your finances. A couple should discuss the options, be aware of the consequences of the different methods, and go with what works for them.

Working together is great, but a few rules(!) can help with this:
1. Before marriage, no mix of assets but joint account for possible joint costs (vacation, rent etc.)
2. Before marriage, full disclosure of financial situation on two lists, possible prenup
3. During marriage, full transparancy about all account levels
4. Personal discretionary accounts, whose level are known to both, but the kind of expenses are kept private

Marriage is built on love, but children and money should be discussed thoroughly before tying thhe knot.

...then go down to the courthouse and get married, you can do it today in a lot of places. It will probably involve less paperwork than the loan will.

This is what I tell anyone who is dating and thinks they should co-sign a loan for their girlfriend or boyfriend. And frankly it comes up a lot because 'love conquers all' in America. If you think you're ready to co-sign a loan but that the idea of getting married this week is ridiculous than you have no idea what co-signing is.

the guy in this story doesn't know what an appropriate boundary is and doesn't know how to communicate or negotiate with his girlfriend. The woman is a user.

This fictional couple didn't have a clue what they were doing. Hopefully ( if they are real people) they will learn something positive from the experience.

Posters who are complaining that finances shouldn't be separate in committed relationships may be right, but they should note that what Nora described was not a committed relationship, it probably wasn't even a relationship where either person defined what they wanted to the other person and came to agreement on it. It's no wonder that hardship followed fast and hard.

I was just rereading your post, Vicki, and realized that you and your partner are two women. So some of what I wrote about you "not being in a committed relationship" because you are not married does not apply, except in a legal sense, except in some states. My apologies.

Perhaps some of your partner's resistance to you saving money has to do with her being unclear whether that saved money is "your" money or "both of yours' " money. Whereas money that you spend to support ongoing activities clearly supports both of you, it is not clear that money put away for future purposes is. I would consider clarifying this to yourself and to her. If she feels like money is being put aside but not for her, that will surely make her feel insecure financially.

I would also look at the issue of you putting child support money into a 529 for your son. That is a fantastic policy from the point of view of providing for his future education. But again, here, she gets no benefit from it as the money is sequestered away. If the money just went into a household fund, she would get some of the benefit of it and that may be why she's resistant. If she doesn't see the need for saving for your son's education, though, that, that would ring a bell for me.

It sounds like, from her background, she just has a widely different eduation about money and expectations for it, and little knowledge about effective financial planning and management. This is underlined by the fact that no bank will give here even the amount of credit required to operate a checking account.

You two clearly have more issues to work on, I hope that you are able to do it in a way that is fair and that gives you clarity.

You made the following statement, that you cannot use a 3 pot system because:

"Unfortunately, my partner can no longer get a checking account, so this system doesn't work for me. And I find I've inherited a lot of debt that I'm going to be paying for in addition to my own. Finances should definitely be discussed long before making committments to one another."

You can still do the 3 pot system. Your partner will have to deal in cash only, though. You could split the household pot into a cash part for her, and do your own transactions out of the household bank account (give her a monthly portion of the household pot in cash for her to use, and if she runs out of that and there's still money available for the month, she could get more cash. Just make it equal by making sure that you BOTH adhere to the monthly budget and don't go over.)For her personal money, she can get a statement savings account and a linked debit card. If she needs a paper check she can either give you the cash and have you write the check, or buy a bank check at her bank.

I'm guessing this will be a challenge for her to manage, but really being able to manage a cash budget is the foundation of personal finance and she will either be able to do so, or you will discover she cannot or will not. And then you would have to decide whether you are going to live with your commitment or not if she can't commit to managing her money effectively.

I'm going to try to sit down and talk with her again about this. I just feel like she puts me out there as the finance person and doesn't want to get involved. She always has an excuse for not getting involved. She doesn't like that I have investment accounts and am comfortable with riskier investments like stocks, even in the current market. She doesn't see the value of saving money for retirement because she doesn't think it's a sure thing. I tried to explain to her that my investment money is a sure thing, but she doesn't understand that.

We have no financial goals together. Maybe that would help us out. Maybe if we sat down and did that together, we would actually be able to work together as partners with this money thing.

Regarding not having financial goals with your partner, it's worth realizing (as I'm sure you do) that financial goals are intricately linked, and to some degree subordinate to, more personal goals in one's relationship. I know that in my own life, money conflicts or misunderstandings ahve shown up "cracks" in other parts of my relationship, where my partner and I are not or are not yet in adequate alignement in our expectations and intentions. It can be tricky to sort out, but often money issues do shed light on areas in our relationships that need working out/clarifying.

Best wishes and good luck to you both,

--steve

Guest #26

My husband and I do a version of the 3 pot system. He has his own account and I am fine managing the joint accounts for checking, savings and emergency fund. He needs that feeling of having money set aside that he can do whatever he wants with.

Even though we don't keep the appointment every time, I have a scheduled time every 2 weeks to talk about money stuff and keep a spreadsheet of our budgeting that he can look at any time.

This is what works for us, with so many marriages and relationships ending because of money issues I don't know why every committed person does not address this as a top 3 issue in their relationship. Religion, Children and Money.

@Vicki - In addition to the suggestions of setting up a cash system, and including her in goals you could also bring up an IRA for her, life insurance planning ( not just for you, if something happens to her coverage would have to cover daycare), and the realities of how college education can bankrupt a family if you don't plan ahead. If you make it personal, and less threatening by it being a regular topic of discussion (instead of a once every few months blow up) she should give it more weight. I know if my spouse approaches me with something and makes me know how important it is to him in a quiet serious way I give it more consideration. Once we started joining our finances I found it best to go little by little and make it a regular discussion, he got overloaded quickly.

It also might be helpful to take a book like David Bach's "smart couples finish rich" and work through the chapters together. Learn new things about money together so it doesn't seem like its foreign to her and it takes the pressure off you to be the "expert".

Good luck to you I am glad to sense that you don't sound like giving up anytime soon! Having a frugal partner will be a great asset in the long run!

Excellent article. Only one so far that doesn't presume it is women being taken for a ride. I am appalled at how many women - and there are some national issues here - are so materialistic and Machiavellian and see marriage as just another form of career advancement. Having said that, I know one man and one woman who have both been stung by spouses forging their signature on loan documents. The woman was stung for $100,000 and the man for $600,000. The woman's legal advice was that she had to pay up even though she never signed anything because she couldn't prove she hadn't without a lot of stress, money and court battles. I really wonder whether this was correct advice. My male friend also never signed anything but seems to be trying to pay it probably because it would be too embarrassing in his line of work to take legal action against her. It is another aspect of Sexually Transmitted Debt where spouses can be utterly innocent of any financial ill judgment except merging their financial affairs with an untrustworthy spouse.